fy2019 (april 2018 march 2019) financial announcement · 2019. 5. 7. · corp ir / april 26, 2019 1...

CORP IR / April 26, 2019 1

April 26, 2019

FY2019 (April 2018 – March 2019) Financial Announcement

Agenda:

FY2019 Consolidated Financial Summary

Ken Sasagawa, Vice President, Accounting Dept.

Business Environment and Financial Estimates

Toshiki Kawai, Representative Director, President & CEO


Disclaimer regarding forward-looking statement

Forecast of TEL’s performance and future prospects and other sort of information published are made based on

information available at the time of publication. Actual performance and results may differ significantly from the

forecast described here due to changes in various external and internal factors, including the economic situation,

semiconductor/FPD market conditions, intensification of sales competition, safety and product quality management,

and intellectual property-related risks.

Processing of numbers

For the amount listed, because fractions are rounded down, there may be the cases where the total for certain

account titles does not correspond to the sum of the respective figures for account titles. Percentages are calculated

using full amounts, before rounding.

Exchange risk

In principle, export sales of Tokyo Electron’s mainstay semiconductor and FPD production equipment are

denominated in yen. While some settlements are denominated in dollars, exchange risk is hedged as forward

exchange contracts are made individually at the time of booking. Accordingly, the effect of exchange rates on profits

is negligible.

Forward Looking Statements

FPD: Flat panel display


April 26, 2019

Ken Sasagawa

Vice President, Accounting Dept.

FY2019 Consolidated Financial SummaryFY2019: April 1, 2018 – March 31, 2019


FY2019 (April 2018 – March 2019) Highlights

Net sales +13% YoY driven by higher competitiveness in the growing SPE*1

market and expanded share in FPD*2

New record highs for gross profit, operating income and net income attributable to owners of parent

Net Sales and Gross Profit Margin

613.1 663.9799.7

1,130.7

39.6% 40.2% 40.3%42.0% 41.2%

0

400

800

1,200

FY'15 FY'16 FY'17 FY'18 FY'19

Net sales (¥B)

Gross profit margin

88.1116.7

155.6

281.1310.5

14.4%

17.6%19.5%

24.9%

24.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

50

100

150

200

250

300

FY'15 FY'16 FY'17 FY'18 FY'19

Operating income (¥B)

Operating margin

Operating Income and Operating Margin

Net Income Attributable to

Owners of Parent and ROE

71.8 77.8

115.2

204.3

248.211.8% 13.0%

19.1%

29.0%

30.1%

0

50

100

150

200

250

FY'15 FY'16 FY'17 FY'18 FY'19

Net income attributable toowners of parent (¥B)

ROE

*1 SPE: Semiconductor production equipment *2 FPD: Flat panel display production equipment

1,278.2


Financial Summary

FY2018 FY2019YoY

Change

(Reference)

FY2019 estimates

announced on

Oct. 31, 2018

Net sales 1,130.7 1,278.2 +13.0% 1,280.0SPE 1,055.2 1,166.7 +10.6% 1,169.8

FPD 75.0 111.2 +48.2% 110.0

Gross profitGross profit margin

475.042.0%

526.141.2%

+10.8%-0.8pts

528.041.3%

SG&A expenses 193.8 215.6 +11.2% 219.0Operating incomeOperating margin

281.124.9%

310.524.3%

+10.5%-0.6pts

309.024.1%

Income before income taxes 275.2 321.5 +16.8% 315.0Net income attributable to

owners of parent204.3 248.2 +21.5% 237.0

EPS (Yen) 1,245.48 1,513.58 +21.5% 1,445.13

R&D expenses 97.1 113.9 +17.4% 116.0

Capital expenditures 45.6 49.7 +9.1% 51.0

Depreciation and amortization 20.6 24.3 +18.0% 26.0

(Billion yen)

1. In principle, export sales of Tokyo Electron’s mainstay semiconductor and FPD production equipment are denominated in yen. While some settlements are denominated

in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking.

2. Profit ratios are calculated using full amounts, before rounding.

SPE: Semiconductor production equipment, FPD: Flat panel display production equipment


Financial Summary (Quarterly)

FY2018 FY2019

Q4 Q1 Q2 Q3 Q4vs. Q3

FY2019

Net sales 355.9 295.5 395.4 268.1 319.0 +19.0%

SPE 326.0 280.4 358.0 239.5 288.7 +20.6%

FPD 29.7 15.1 37.3 28.5 30.1 +5.6%


153.543.1%

122.441.4%

161.640.9%

109.740.9%

132.241.5%

+20.5%+0.6pts

SG&A expenses 53.7 50.0 58.6 51.0 55.8 +9.5%

Operating incomeOperating margin

99.728.0%

72.424.5%

103.026.0%

58.721.9%

76.424.0%

+30.1%+2.1pts

Income before income taxes 95.6 75.2 105.8 60.5 79.8 +31.7%

Net income attributable to

owners of parent72.9 55.7 79.5 48.8 64.1 +31.3%

R&D expenses 27.0 26.1 31.2 26.5 30.0 +13.3%

Capital expenditures 12.0 9.6 13.2 11.8 14.9 +26.6%

Depreciation and amortization 6.0 5.0 5.6 6.2 7.3 +17.2%

1. In principle, export sales of Tokyo Electron’s mainstay semiconductor and FPD production equipment are denominated in yen. While some settlements are denominated

in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking.

2. Profit ratios are calculated using full amounts, before rounding.

(Billion Yen)

SPE: Semiconductor production equipment, FPD: Flat panel display production equipment


93 91

7 9

0%

50%

100%

FY'18 FY'19

1,055.2

1,166.7

314.6 326.7

29.8%28.0%

0%

10%

20%

30%

40%

50%

60%

0

400

800

1,200

1,600

FY'18 FY'19

Segment Information

75.0

111.2

13.2

24.2

17.7%

21.8%

0%

10%

20%

30%

40%

50%

60%

0

40

80

120

160

FY'18 FY'19

SPE

FPD

SPE(Semiconductor Production Equipment)

FPD(Flat Panel Display Production Equipment)

(Billion Yen) (Billion Yen)

Composition of Net Sales

Sales

Segment income

Segment profit margin

Sales

Segment income


1. Segment income is based on income before income taxes.

2. R&D expenses such as fundamental research and element research are not included in above reportable segments.

3. Composition of net sales figures is based on the sales to customers.


(Billion Yen)

In FY2019 in memory, steady investment for

increasing production capacity and cutting-

edge technologies accompanied strong

demand for servers

In logic/foundry, investment continued for

the 14nm and subsequent generations

SPE Division: New Equipment Sales by Application

24%25% 21%

31%11% 10%

28%

40% 38%

17%

24%31%

550.3

814.6

888.7

0

400

800

1,200

FY'17 FY'18 FY'19

DRAM

Non-volatile memory

Logic foundry

Logic & others (MPU, AP, Others)


Sales grew in FY2019 in coater/developer

and etch systems

SPE Division: New Equipment Sales by Product

2% 1% 1%6% 6% 7%11%

10% 9%22%

23% 20%

34%

40% 40%25%

20%23%

550.3

814.6

888.7

0

400

800

1,200

FY'17 FY'18 FY'19

Coater/Developer

Etch system

Deposition system

Cleaning system

Wafer prober

Others

(Billion Yen)


115.0

150.0

188.8

93.0

101.0

99.4

208.0

251.0

288.2

0

100

200

300

FY'17 FY'18 FY'19

FY2019 sales were ¥288.2 billion,

+15% YoY. Parts sales especially grew

due to an increase in installed base and

comprehensive service contracts

Field Solutions Sales

Used equipment and modification

Parts and services

(Billion Yen)

* FY2017 sales figures have been rounded.


114.3 119.1 115.4 109.5 115.615.8 17.2 17.1 9.9 9.0

125.9 131.2 139.9 142.2 150.0

69.0 28.7 42.7 55.489.0

344.0 381.6 344.0 368.2354.2

159.5 151.3 155.3 144.7146.9

373.8 355.5 423.7 341.1392.6

1,202.7 1,185.01,238.5

1,171.4

1,257.6

Q4FY'18

Q1FY'19

Q2 Q3 Q4

Balance Sheet (Quarterly)

771.5 772.3849.5 821.9

888.1

431.2 412.7388.9

349.5

369.5

1,202.7 1,185.01,238.5

1,171.4

1,257.6

Q4FY'18

Q1FY'19

Q2 Q3 Q4

Assets Liabilities & Net Assets


* Cash and cash equivalents: Cash and deposits + Short-term investments, etc. (Securities in B/S).

From the beginning of the FY2019 Q1 accounting period the Accounting Standards Board of Japan’s “Partial Amendments to Accoun ting Standard for Tax Effect Accounting”

(ASBJ Statement No. 28, revision on February 16, 2018) has been applied. FY2018 results have been restated in the graphs in accordance with the revised accounting standard.

Liabilities

Net assets

Other current assets

Tangible assets

Intangible assets

Cash & cash

equivalents*

Inventories

Trade notes, accounts

receivables

Investment & other assets


Turnover days = inventory or accounts receivable at the end of each quarter / last 12 months sales x 365

Inventory Turnover and Accounts Receivable Turnover (Quarterly)

319.0

61 57 54 54 52

46 43 40 42

108 110 107

117 111

117

96 102

101

0

40

80

120

160

0

100

200

300

400

Q4FY'17

Q1FY'18

Q2 Q3 Q4 Q1FY'19

Q2 Q3 Q4

(Billion Yen)

Net sales

Accounts receivable turnover

Inventory turnover

(Days)


Cash Flow (Quarterly)

65.0

-14.4

50.5

-100

-80

-60

-40

-20

0

20

40

60

80

100

Q4

FY’17

Q1

FY’18

Q2 Q3 Q4 Q1

FY’19

Q2 Q3 Q4

Cash flow from operating activities 43.6 24.4 43.4 30.4 88.1 51.4 84.0 -11.0 65.0

Cash flow from investing activities*1 -4.9 -9.3 -9.4 -15.2 -12.8 -12.1 -12.2 -1.1 -14.4

Cash flow from financing activities -0.0 -36.8 -0.0 -45.7 -0.0 -56.9 -5.0 -67.8 -0.0

Free cash flow*2 38.7 15.1 34.0 15.1 75.3 39.3 71.7 -12.1 50.5

Cash on hand*3 315.3 294.6 329.9 301.2 373.8 355.5 423.7 341.1 392.6

*1 Cash flow from investing activities excludes changes in deposits with periods to maturity of over 3 months.

*2 Free cash flow = cash flow from operating activities + cash flow from investing activities excluding changes in deposits with periods to maturity of over 3 months.

*3 Cash on hand includes the total of cash + deposits with periods to maturity of over 3 months.

(Billion Yen)

-0.0


April 26, 2019

Toshiki Kawai

Representative Director, President & CEO

Business Environment and Financial Estimates


FY2019 SPE Business Highlights

Focused on growth areas, achieved highest-ever WFE share of 15%

Coater/Developer

Cleaning System

Achieved 88% share

100% share in

HVM EUV

Maintained share

established in CY’17,

which had been a significant

increase on CY’16 (+5pts)

High accolades from market for

bevel clean and pattern collapse

prevention technologies

Wafer Prober No. 1 share in probers for

second straight year

Deposition System

Grew share (+2pts vs. CY’17)

Began construction of new

production buildings at

Yamanashi and Tohoku plants

Etch System 3D NAND slit process

Achieved 30% of medium-term plan

share target (+4pts vs. CY’17)

Began operations at new logistics

and development buildings at

Miyagi plant


Achieved record-high sales and operating

profit. Accomplished medium-term plan target

operating margin of 20%

Grew sales of equipment for G10.5.

Contributed to higher sales

and profit margin

Launched new products

– Impressio™ 3300 PICP*™ G10.5

plasma etch system for high definition FPD

– Elius™ 1000 G4.5 inkjet printing system

for manufacturing OLED panels

FY2019 FPD Business Highlights

Achieved record-high sales and significantly improved profit margin

10.0%

3.3%

10.6%9.4%

17.7%

0%

5%

10%

15%

20%

25%

30%

0

20

40

60

80

100

120 ¥111.2B

Sales

(¥B)

Segment

profit margin

21.8%

FPD Coater/Developer

Exceliner™

* PICP: Plasma source for producing extremely uniform high density plasma on substrate


TEL Main Products World Market Share (CY2018)

Semiconductor Production Equipment

FPD Production Equipment (FY2019)

Source (FPD) : TEL survey

88%

30%38%

25%

Deposition System Cleaning SystemCoater/Developer Dry Etch System

47%

Wafer Prober*

27%40%

54%

ALD CVD Oxidation/Diffusion

29%

68%

FPD Coater/Developer FPD Etcher/Asher

Source

SPE (excluding Wafer Prober) : Gartner, “Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 2018”, Bob Johnson,

Gaurav Gupta et al, 24 April 2019

Charts/graphics created by Tokyo Electron based on Gartner research.

Coater/Developer: Photoresist processing (Track), Dry Etch System: Dry etch, Deposition System: Tube CVD + Atomic layer

deposition tools + Oxidation/diffusion furnaces + Nontube LPCVD, ALD: Atomic layer deposition tools, CVD: Tube CVD + Nontube

LPCVD, Oxidation/Diffusion Furnaces : Oxidation/diffusion, Cleaning System: Single Wafer Processors + Wet stations +Batch Spray

processors + Other clean process

* SPE (Wafer Prober) : VLSI Research, April 2019

Charts/graphics created by Tokyo Electron based on VLSI Research


► WFE*1 capex

We expect CY2019 investment to decrease 15-20% YoY.

Despite solid investment for logic/foundry, we expect a temporary

adjustment in memory investment on a softening in demand.

However, inventory adjustments are proceeding steadily and there are

emerging signs of recoveries in NAND from the second half of the year

and in DRAM from early CY2020

►FPD production equipment capex for TFT array process*2

In 2019, we expect capex for OLED panels in mobile applications to be soft,

and investment in large panels is undergoing a temporary adjustment.

Full-year capex is forecast to decrease 30% YoY, but a recovery is expected

from H2

Business Environment (Outlook as of April 2019)

*1 WFE (Wafer fab equipment): The semiconductor production process is divided into front-end production, in which circuits are formed on wafers and inspected, and back-end production, in

which wafers are cut into chips, assembled and inspected again. Wafer fab equipment refers to the production equipment used in front-end production and in wafer-level packaging production.

*2 TFT array process: The processes of manufacturing the substrates with the electric circuit functions that drive displays


Logic/Foundry: Forecasting market growth of approx. 25% YoY

– Market environment: Increased capex on generation change. 10nm and beyond generation

to comprise 50%

– Opportunities: Business expansion in more complex patterning processes

DRAM: Approx. 30% decrease YoY. Expect a recovery from early CY2020

– Market environment: 1Y/1Znm generations to comprise over 60% of capex

– Opportunities: Combined patterning in latest generation

Non-volatile memory: Approx. 50% decrease YoY. Signs of a recovery in H2

– Market environment: Making adjustments in investment for increasing production capacity

due to improved yield, but inventories are steadily declining. 9X/12X generations to

comprise over 80% of capex.

– Opportunities: Differentiation through high value-added etch and clean

CY’19 WFE Market and Business Opportunities by Application


FY2020 Financial Estimates

CORP IR / April 26, 2019 21SPE: Semiconductor production equipment, FPD: Flat panel display production equipment

FY2019

(Actual)

FY2020 (Estimates)

H1 H2 Full yearFull year

YoY change

Net sales 1,278.2 490.0 610.0 1,100.0 -13.9%

SPE 1,166.7 450.0 580.0 1,030.0 -11.7%

FPD 111.2 40.0 30.0 70.0 -37.1%


526.141.2%

192.039.2%

249.040.8%

441.040.1%

-85.1-1.1pts

SG&A expenses 215.6 107.0 114.0 221.0 +5.3

Operating incomeOperating margin

310.524.3%

85.017.3%

135.022.1%

220.020.0%

-90.5-4.3pts

Income before income taxes 321.5 85.0 135.0 220.0 -101.5

Net income attributable to

owners of parent248.2 63.0 101.0 164.0 -84.2

Net income per share (Yen) 1,513.58 384.24 - 1,000.25 -513.33

FY2020 Financial Estimates

Market undergoing correction but continuing investmenttowards a recovery next year

(Billion yen)


504.3

384.3

319.0

444.0

0

100

200

300

400

500

FY'19 H1(Actual)

FY'19 H2(Actual)

FY'20 H1(Estimates)

FY'20 H2(Estimates)

FY2020 SPE Division New Equipment Sales Forecast

Sales by application DRAM

– Adjustments in supply and demand to

proceed through H2 CY’19

3D NAND

– Signs of a recovery in H2 FY’20

ahead of DRAM

Logic/Foundry

– Increased investment in 10nm and

subsequent generations

– Also firm investment in 28nm and

prior generations

Logic foundry

Logic & others

DRAM

Non-volatile memory(Billion yen)

Percentages on the graph show the composition ratio of new equipment sales. Field solutions sales are not included.

30%

42%

8%

20%

32%

34%

12%

22%

25%

21%

19%

35%

25%

27%

16%

32%


Oshu City, Iwate Prefecture:

approx. ¥13.0B construction cost

(Began construction in October 2018,

completion scheduled for September 2019)

FY2020 R&D Expenses, Capex Plan

R&D Expenses ¥120.0B– Continue investing based on focus areas and

sustainable growth

Capex ¥56.0B– Actively invest in advanced technologies R&D

and to meet increasing production

Depreciation ¥33.0B

Continue upfront investment with achievement of medium-term plan

and further growth in view

76.283.8

97.1113.9 120.0

0

50

100

150

FY'16 FY'17 FY'18 FY'19 FY'20 (E)

13.320.6

45.6 49.756.0

19.2 17.8 20.624.3

33.0

0

20

40

60

FY'16 FY'17 FY'18 FY'19 FY'20 (E)

New production buildings

(deposition systems, gas chemical etch systems, test systems)

Nirasaki City, Yamanashi Prefecture:

approx. ¥13.0B construction cost

(Began construction in February 2019,

completion scheduled for April 2020)

R&D expenses(Billion Yen)

(Billion Yen) Capex Depreciation


FY2020 Dividend Forecast

(Yen)Dividend per share

Dividend payout ratio: 50%

Annual DPS of not less than 150 yen

We will flexibly consider share buybacks

TEL shareholder return policy

We will review our dividend policy if the company does not generate

net income for two consecutive fiscal years

Expect to pay DPS of 502 yen, in-line with 50% dividend payout ratio

0

300

600

900

FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 (E)

143 yen

237 yen

Interim

193 yen

Year-end

309 yen

624 yen

352 yen

758 yen

502 yen


Appendix


Q4

FY’18

Q1

FY’19

Q2 Q3 Q4

Net sales 355.9 295.5 395.4 268.1 319.0

Operating income 99.7 72.4 103.0 58.7 76.4

Net income attributable

to owners of parent72.9 55.7 79.5 48.8 64.1

Gross profit margin 43.1% 41.4% 40.9% 40.9% 41.5%

Operating margin 28.0% 24.5% 26.0% 21.9% 24.0%

319.0

76.4 64.1

41.5%

24.0%

0%

10%

20%

30%

40%

50%

0

100

200

300

400

500

Financial Performance (Quarterly)(Billion Yen)


326.0

280.4

358.0

239.5

288.7

100.7

78.3

105.8

60.7

81.7

30.9%

27.9%29.6%

25.4%

28.3%

0%

10%

20%

30%

40%

50%

0

80

160

240

320

400

Q4FY'18

Q1FY'19

Q2 Q3 Q4

Segment Information (Quarterly)

29.7

15.1

37.3

28.5 30.1

7.4

2.4

9.5

5.8 6.4

25.1%

16.2%

25.5%

20.5% 21.2%

0%

10%

20%

30%

40%

50%

0

8

16

24

32

40

Q4FY'18

Q1FY'19

Q2 Q3 Q4

92 95 91 89 91

8 5 9 11 9

0%

50%

100%

Q4FY'18

Q1FY'19

Q2 Q3 Q4

SPE(Semiconductor production equipment)

FPD(Flat panel display production equipment)

Composition of Net Sales


Sales

Segment income


Sales

Segment income


SPE

FPD

1. Segment income is based on income before income taxes.

2. R&D expenses such as fundamental research and element research, etc. and other general and administrative expenses are not included in the above reportable segments.

3. Composition of net sales figures is based on the sales to customers.


Q4

FY’17

Q1

FY’18

Q2 Q3 Q4 Q1

FY’19

Q2 Q3 Q4

Japan 26.6 26.7 38.4 35.1 45.1 51.1 58.0 54.0 42.7

North America 25.4 24.0 32.0 29.1 33.9 28.4 45.9 22.7 34.7

Europe 32.9 25.3 26.9 19.6 25.0 17.7 31.3 18.6 25.3

South Korea 55.5 68.3 101.7 79.4 122.3 88.9 86.5 60.9 68.9

Taiwan 74.7 45.8 36.6 42.1 44.3 26.3 48.0 29.3 59.1

China 22.7 26.7 23.0 22.6 31.8 54.9 71.3 38.0 42.5

S. E. Asia, Others 5.3 4.6 6.7 13.2 23.4 12.7 16.8 15.6 15.2

SPE Division: Sales by Region (Quarterly)

243.5221.9

265.7241.4

326.0

280.4

358.0

239.5

288.7

0

100

200

300

400

(Billion Yen)


SPE Division: Sales by Region

145.5

206.0

0

200

400

FY'18 FY'19

119.2 131.9

0

200

400

FY'18 FY'19

96.9 93.1

0

200

400

FY'18 FY'19

371.9

305.4

0

200

400

FY'18 FY'19

169.0 162.9

0

200

400

FY'18 FY'19

104.3

206.9

0

200

400

FY'18 FY'19

48.2 60.4

0

200

400

FY'18 FY'19

14 18

11 11

9 8

35 26

16 14

10 18

5 5

0%

50%

100%

FY'18 FY'19

(Billion Yen)

Japan North America Europe Korea(Billion Yen)(Billion Yen) (Billion Yen)

Taiwan China S.E. Asia, Others Region Composition(Billion Yen) (Billion Yen) (Billion Yen)

S.E. Asia,

Others

China

Taiwan

Korea

Europe

North America

Japan


SPE Division: New Equipment Sales by Application (Quarterly)

29%

20%

30%

21%

25%

23%

27%

25%

38%

17%

22%

23%

18%

31%

32%

19%

12%

31%

32%

25%

16%

24%

34%

26%

22%

27%

27%

24%

17%

40%

16%

27%

DRAM

Non-volatile memory

Logic foundry

Logic & others

(MPU, AP, Others)

(Billion Yen)

Percentages on the graph show the composition ratio of new equipment sales. Field solutions sales are not included.

25%

23%

27%

25%

38%

17%

22%

23%

18%

31%

32%

19%

12%

31%

32%

25%

16%

24%

34%

26%

22%

27%

27%

24%

17%

40%

16%

27%

25%

35%

8%

32%

24% 27%32%

26% 19% 17%23%

18%26%

27%16%

8%12% 10%

4%

11%

9%

15%

27%40%

35%41%

43%

49%

36%

45%

24%

22%17%

25%21%

28%

30%

30%

28%

35%

185.3

169.7

204.3

181.7

258.8

219.7

284.5

169.8

214.5

0

50

100

150

200

250

300

Q4FY'17

Q1FY'18

Q2 Q3 Q4 Q1FY'19

Q2 Q3 Q4


Field Solutions Sales (Quarterly)

60.4

54.4

64.462.1

70.0

63.2

76.1 72.5 76.3

0

20

40

60

80

Q4

FY’17

Q1

FY’18

Q2 Q3 Q4 Q1

FY’19

Q2 Q3 Q4

SPE Sales 58.1 52.2 61.4 59.7 67.2 60.6 73.4 69.6 74.2

FPD Sales 2.2 2.2 2.9 2.4 2.8 2.5 2.7 2.8 2.1

(Billion Yen)

fy2019 (april 2018 march 2019) financial announcement · 2019. 5. 7. · corp ir / april 26, 2019 1...

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